By the end of 2015, downtown Austin could have as many as 2,534 new apartment units in nine different complexes, said Michael Knox of the city of Austin’s Economic Growth and Redevelopment Office. Of the planned apartments, 1,122 units are under construction, said Charles Heimsath, president of Capitol Market Research, an Austin-based real estate research firm. Heimsath said the 1,122 units represent approximately 13 percent of the apartment units under construction within Central Austin.
“The demand, as measured by occupancy and sales, has been just extraordinary,” Heimsath said. “I think that everybody has been a little bit surprised at the strength of downtown.”
A desire by people to rely less on cars and live in a place that is walkable to destinations is fueling a desire to live downtown, said Jude Galligan, the owner of REATX, a local real estate brokerage firm. As a desire to live downtown shows no signs of decreasing, real estate experts predict more multifamily projects to be announced in the future.
“The suburbs are no longer adequate for how people are choosing to live their lives, whether they are millennials, [Generation] Y or empty-nesters,” Galligan said. “It’s a feeling of connectedness that the suburbs and car-centric communities cannot provide. The place where a city can provide this is in its central urban core.”
Steady price increase
While the economic downturn reduced the average apartment rent throughout Austin, the rents for downtown apartments have steadily increased, Heimsath said. The average price of a downtown apartment is approximately $2.30 per square foot, which is about double the average price of apartments in other parts of Austin, Heimsath said.
Among the multifamily projects in development is Capital Studios, the first new downtown affordable housing community in 45 years, said Foundation Communities Executive Director Walter Moreau. Foundation Communities, a local nonprofit that provides affordable housing, was awarded the tax credits on July 26 needed to build Capital Studios.
Capital Studios will have 135 efficiency apartments that will range from $400–$650 per month, which includes all bills.
“I think it’s important for our community to not become so expensive that lower-income working folks have to move farther and farther away, or from the region all together,” Moreau said. “I want to live in an Austin that is still mixed income.”
Jeff Jack, former president of the Austin Neighborhood Council and current chair of the city of Austin Board of Adjustment, said Capital Studios is a “great” project. However, he does not think it will come close to meeting the need for affordable housing in the area.
“It’s not nearly enough to satisfy the need for housing the employees [that work] downtown,” he said.
Lack of condominium projects
While there are multiple downtown apartment projects in the pipeline, there are no known condos in development, Galligan said.
Galligan said clients consistently ask him about downtown condos, but he said he does not have any to show them.
Heimsath said a lack of new downtown condo projects is because of a reluctance by national investors to put money into such projects.
“[Financiers have been saying that] ‘Austin is great, but the condo market isn’t great nationally, and we’re really not sure how deep the market is in Austin, so we’re not interested in adding to that,’” he said.
However, Heimsath said he thinks the lack of available downtown condos is changing that attitude. Both Heimsath and Galligan said they expect to see at least one new condo project either submit plans to the city or break ground within the next year or two.
“I would imagine that the more sophisticated, progressive developers with access to the right channels of capital are [speculating] new condo projects right now,” Galligan said.
Greater Austin area
While there is a focus on downtown apartment development, Galligan said the area surrounding the city’s core has also seen a significant increase in new apartment activity.
Parts of South Austin and areas near The University of Texas have seen just as much apartment development as downtown, Galligan said. There are 8,347 apartment units under construction in Central Austin, Heimsath said.
Shandy Kellams, the assistant business manager for Eleven, an apartment complex opening in September at 811 E. 11th St., said interest has been high for living near downtown in East Austin.
“It’s awesome for people who want to live downtown but don’t want to pay those [downtown] prices,” she said.
Galligan said the same forces driving people to live downtown are the same reasons people move to Central Austin.
“For the core, it is a very healthy trend to see people moving back into the cities, to get back into the walkable lifestyle and to be connected again,” he said.
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